How Much Information Should you Collect on your Customers?

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Depending on how rabid your appetite for news is, you may or may not have seen the New York Times piece that came out late last week with the headline "how companies learn your secrets." It was drawn from Charles Duhigg's forthcoming book, "The Power of Habit: Why We Do What We Do in Life and Business." To cut to the chase, the article -- and the Forbes counterpart piece -- was creepy, alarming, and gave me pause. Why? Well, because it discussed how a Target store figured out a man's daughter was pregnant before he did based on purchases she was making at the store. As the Forbes piece explains, "Target assigns every customer a Guest ID number, tied to their credit card, name, or email address that becomes a bucket that stores a history of everything they’ve bought and any demographic information Target has collected from them or bought from other sources."

From that history, Target started sending this young woman coupons for baby clothes and diapers. As you might imagine, the father was none too pleased, and even less so when he discovered that his daughter was, in fact, pregnant.

To take things back to entrepreneur land, this made me wonder: How much information should a business owner collect on their customers? How much of that is fair game in using for marketing or mailing out circulars? What white-hat rules here are unspoken and need to be spoken? It's just truly bizarre because people were far more reluctant to use their credit cards when making online purchases than in stores -- but now it seems like if customers want to have any shred of privacy, they should start paying in cash.

"It's not just Target, it's just about every company and our government," says Robert Smith, who runs Loves Park-based Champion Media. "Privacy is dead in America."

Maybe so, but still, that's an awful harsh view of things, but Ross Meister, the PR coordinator for Chicago-based online savings site coupontrade.com thinks customers should understand that, in part, this is just how things work nowadays, for better or worse.

"I think it's a fair assumption that unless explicitly stated otherwise, any information that a consumer shares with a company [is] open to analysis by that company," says Meister. He also added that customers should expect companies not to share their information with other companies, not to seek out additional information other than what was willingly offered during an individual transaction, and that if a customer deletes their account with a merchant, the company should honor that by deleting any non-record keeping information associated with that consumer.

But as Meister points out: "Credit cards are the obvious culprit here. If you pay with cash and don't share any personal information with a brick and mortar store, they have no way of building a profile."

Okay, so. If you're a consumer, use cash. I think we all knew that in the first place. But what if you're a business owner? Kurt Elster, the creative director for Chicago-based Ethercycle, an interactive agency, offers this slick piece of advice: be transparent.

"Businesses have the best intentions. They want to provide the best experience for their customers, and they don't want to risk annoying people through irrelevant advertising… When I don't know the source of an advertiser's information about me, it's a creepy feeling."

If it feels creepy just reading about this all, imagine if you were that girl's father. There probably isn't a way to make that situation less awkward or any less of a powderkeg, but Target came off seeming like the biggest creep of all.

"One way to work around that is being very transparent about your practices, explains Elster. "Target’s stonewalling of the New York Times reporter isn’t transparent. If people understood that targeted marketing is about statistical probabilities, and not someone poking around in their garbage cans at night, then I’m sure they would feel differently. It’s the difference between looking like a statistician and looking like a stalker."

I guess ultimately, you have to ask yourself: Which would you rather look like?

David Wolinsky is a freelance writer and a lifelong Chicagoan. In addition to currently serving as an interviewer-writer for Adult Swim, he's also a columnist for EGM. He was the Chicago city editor for The Onion A.V. Club where he provided in-depth daily coverage of this city's bustling arts/entertainment scene for half a decade. When not playing video games for work he's thinking of dashing out to Chicago Diner, Pizano's, or Yummy Yummy. His first career aspirations were to be a game-show host.